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Morning Bell 20 May

Bell Direct
May 20, 2025

Wall Street ended the first trading session of the new week in positive territory as investors overlooked the latest moody credit rating downgrade on the U.S. on Friday, and instead favoured optimism from the trade negotiation progress with China. The S&P500 rose 0.09% to post a 6th straight winning day, while the Nasdaq climbed 0.02% and the Dow Jones ended the day up 0.32%.

The debt downgrade on Friday pushed bond yields higher early on Monday before they retreated in afternoon trade hence sending equities higher to start the week.

Over in Europe on Monday markets in the region closed mostly flat ahead of key corporate earnings results out this week. The STOXX 600 closed flat, Germany’s DAX rose 0.6% to yet another fresh record high, the French CAC fell 0.04%, and, in the UK, the FTSE 100 ended the day up 0.17%.

Across the Asia markets on Monday, it was a sea of red as investors assessed the Moody’s credit rating downgrade on the U.S. and latest slew of economic data out of China including retail sales data rising at a weaker rate than expected for April, while industrial output for the same period rose more than economists were expecting.

Hong Kong’s Hang Seng fell 0.05%, China’s CSI index lost 0.5%, Japan’s Nikkei fell 0.68% and South Korea’s Kospi index ended the day down 0.89%.
China’s retail sales for April rose 5.1% in data out yesterday which fell short of expectations of a 5.8% rise and indicates the impact of sluggish post-pandemic era and tariffs on consumer spend in the region.

Locally to start the new trading week, the ASX200 posted a 0.58% loss on Monday as a sharp selloff in energy and materials stocks weighed on the key index and investor sentiment ahead of the RBA’s rate announcement today.

What to watch today:

  • The price of gold rebounded on Monday following Moody’s downgrade of the US credit rating to AA1 from AAA amid mounting concerns over US economic outlook and growing budget deficit. Gold producers including Northern Star Resources, Evolution Mining and Ramelius Resources posted gains over 1%, 3% and 2% respectively.
  • On a corporate level, we saw Domino’s and Mineral Resources shares both slide yesterday after announcing respective changes at the board level, with Domino’s Chief of Australia and NZ business, Kerri Hayman, stepping down in August after 37-years with the pizza giant, while Mineral Resources announced the appointment of Malcolm Bundey as successor to outgoing chairman James McClements, who will step away from the company’s board in July.
  • On the commodities front this morning, oil is trading 0.32% higher at US$62.69/barrel, gold is up 0.81% at US$3229.67/ounce, and iron ore is down 0.08% at US$100/tonne.
  • The Aussie dollar has strengthened against the greenback overnight to buy 64.60 US cents, 93.53 Japanese yen, 48.30 British pence and 1 New Zealand dollar at 9 cents.
  • Ahead of Tuesday’s trading session in Australia the SPI futures are anticipating the market will open the day up 0.82%.

Trading Ideas:

  • Bell Potter has upgraded the rating on Paragon Care (ASX:PGC) from a hold to a buy and have a 12-month price target on the company of 52cps following the analyst seeing EPS growth in FY26 which is expected to drive all valuation metrics lower including the PE ratio to below 20x. Management are heavily invested in the long term success of the business and remain laser focused on delivery of the integration, according to the analyst.
  • Trading Central has identified a bullish signal on Northern Star Resources (ASX:NST) following the formation of a pattern over a period of 19-days which is roughly the same amount of time the share price may rise from the close of $18.88 to the range of $24.50 to $24.50 according to standard principles of technical analysis.

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